New York Times: A New Populism Spurs Democrats On the Economy

By Robin Toner

On Capitol Hill and on the presidential campaign trail, Democrats are increasingly moving toward a full-throated populist critique of the current economy.

Clearly influenced by some of their most successful candidates in last year’s Congressional elections, Democrats are talking more and more about the anemic growth in American wages and the negative effects of trade and a globalized economy on American jobs and communities. They deplore what they call a growing gap between the middle class, which is struggling to adjust to a changing job market, and the affluent elites who have prospered in the new economy. Senator Hillary Rodham Clinton, Democrat of New York, calls it ”trickle-down economics without the trickle.”

Populism is hardly new in the Democratic Party. Al Gore vowed to fight for ”the people versus the powerful” in his presidential campaign seven years ago, and Republicans have long accused the Democrats of practicing ”class warfare.”

But the latest populist resurgence is deeply rooted in a view that current economic conditions are difficult and deteriorating for many people, analysts say, and it is now framing debates over tax policy, education, trade, energy and health care. Last week, Senate Democrats held hearings on proposals to raise taxes on some of the highest fliers on Wall Street, the people at the top of private equity and hedge fund firms.

In the House, Representative Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee, convened party leaders and economists for a searching discussion of ”globalization, outsourcing and the American worker — what should government do?” Speaker Nancy Pelosi, Democrat of California, offered the participants some blunt marching orders: ”The American people want to know what we’re doing about their economic security.”

Their language, and to some degree their proposals, reflect a striking contrast with the approach taken by Democrats during much of the 1990s, when President Bill Clinton asserted that trade would create American jobs and that paying attention to the concerns of Wall Street would help the economy by lowering interest rates. The more populist tone is one indication of a broader debate among Democrats over economic policy and how much they should break with the careful centrism of the Clinton years embodied by Robert E. Rubin, the former treasury secretary, who was a champion of free trade and cutting deficits.

So far, Republicans have, by and large, stuck by their free-market philosophy. They point to a rebounding stock market, declining deficits and steady if unspectacular economic expansion as evidence that conservative policies of tax cutting, less regulation and more trade are working.

But Democrats say they are responding to economic trends that the statistics in the headlines do not capture, including middle-class insecurity about jobs, the affordability of health insurance and the costs of education. The times have changed, these Democrats argue, and six years of Republican tax and economic policies have heightened the inequities.

Even as Mrs. Clinton has sought to associate herself with the economic growth of her husband’s administration, she, like other Democratic presidential candidates, has been expressing a sharp skepticism toward trade and globalization under President Bush. In recent weeks she has announced her opposition to the proposed South Korean Free Trade Agreement and denounced globalization that ”is working only for a few of us.” She accepted the endorsement of former Representative Richard A. Gephardt, who spent much of his political career fighting what he asserted were unfair trade agreements.

And Mrs. Clinton has increasingly focused on ”rising inequality and rising pessimism in our work force,” and suggested that another progressive era is — and ought to be — at hand.

Former Senator John Edwards, another Democratic candidate, staked out similar positions months ago and regularly notes that in the last 20 years, ”about half of America’s economic growth has gone to the top 1 percent.” Mr. Edwards praises recent efforts to raise taxes on private equity and hedge funds. His campaign manager, former Representative David E. Bonior, notes that Mr. Edwards has been sounding these themes since his first presidential campaign in 2004.

”John Edwards was there at the beginning of this,” Mr. Bonior said.

While campaigning in Iowa last week, Senator Barack Obama, Democrat of Illinois, suggested that even those who followed the standard advice for coping with a globalized economy — get more education for higher-skilled jobs — were losing out.

”People were told, you’ve got to be trained for high-tech jobs,” Mr. Obama said, ”and then it turned out that some of those high-tech jobs were being outsourced. And people were told, now you need to train for service jobs. And then it turned out the call centers were moving overseas.”

It is not unusual for candidates seeking the Democratic presidential nomination to move left in the primary season; Mr. Clinton himself touched on some of these populist themes in his 1992 campaign. But all the major Democratic candidates for president are promising to use government to ease the insecurity of the middle class, on issues like education and health care.

Sixteen months before the election, with their domestic platforms being formed, these candidates are proposing, for example, to let the Bush tax cuts expire for the most affluent Americans and, in some cases, redirect that money to expanded health care. On the campaign trail and in Congress, Democrats are also talking about expanding assistance for college and help for workers who lose their jobs to cheaper labor abroad.

Democrats have also been pushing for legislation that would allow the federal government to negotiate drug prices for Medicare with the pharmaceutical industry, a favorite target of the economic populists.

Democratic leaders say that unless Congress restores the confidence of the middle class, it will be hard to sell Americans on more trade or even an immigration overhaul.

”I don’t think we’ll be able to do trade agreements, immigration reforms or any of these other kinds of reforms,” Ms. Pelosi said, ”until we present a positive, aggressive economic agenda to the American people — until they know where they stand, now and in the future.”

Representative George Miller, the California Democrat who is chairman of the Committee on Education and Labor, said, ”Trade may not be the reason, or the number one reason, they’re losing their jobs, but they think it is.”

Democratic leaders in the House recently announced that their legislative priorities did not include the renewal of the president’s ”fast track” authority to negotiate new trade agreements, which expired this month. First, they said, they want to find ways ”to expand the benefits of globalization to all Americans.”

There is anxiety on both left and right of the Democratic Party about this new populism. Many on the left worry that the Democratic establishment is merely paying lip service. They are skeptical about the party leaders’ loyalties, noting that many rely on huge contributions from Wall Street, and many have a long commitment to a free-trade agenda. Democratic leaders have, in fact, tried to advance some trade agreements this year, only to meet with substantial resistance within their caucus. Many of the new populists also see the Democratic establishment as far too cautious in confronting what they see as broad inequities in the tax code.

At the same time, centrist Democrats, like those at the research group the

Third Way, worry that the party is veering left away from the optimistic, pro-growth, business-friendly policies that Mr. Clinton championed.

But many Democrats argue that this is an inevitable response to the dislocation and unease in much of the country, which was a crucial factor in the party’s victory in Congress last November. The case for populism is made most powerfully by the Democrats who were elected to Congress last fall. Senator Sherrod Brown of Ohio, who defeated a Republican incumbent with an attack on the trade and economic policies of recent years, said he was convinced that the populists were on the rise. He noted that he carried Ohio by 12.5 percentage points two years after John Kerry, the 2004 Democratic presidential nominee, lost the state by only about 2 percentage points, and with it the presidency.

”That’s because of the economic populist message,” Mr. Brown said. ”They voted minimum wage, they voted trade, they voted student loans, they voted health care and prescription drugs, over what their traditional conservative social values might suggest. And that’s the route to winning Ohio for Hillary or Barack or anybody else.”

Even Representative Rahm Emanuel of Illinois, who is viewed as far too much of an establishment, free-trade Clintonian by many populists, says the party must respond. ”The party that deals with globalization and economic security will win,” Mr. Emanuel said.